Title
The Board of Water Commissioners for the City of Detroit, Water and Sewerage Department authorizes the Director to execute a resolution pertaining to securing low interest loan assistance through the Drinking Water Revolving Fund (DWRF) for Water Main Replacement as detailed in the FY19 DWRF Project Plan, and also authorizes the Director to take such actions as may be necessary to accomplish the intent of this vote.
Body
Agenda of April 18, 2018
Item No. 18-0043
Public Hearing
Drinking Water Revolving Fund (DWRF)
Project Plan FY 19 Water Main Replacement
TO: The Honorable
Board of Water Commissioners
City of Detroit, Michigan
FROM: Gary Brown, Director
Water and Sewerage Department
RE: Public Hearing for Water Main Replacement
Drinking Water Revolving Fund (DWRF), FY19 Project Plan
MOTION
Upon recommendation of Thomas Naughton, Chief Financial Officer, the Board of Water Commissioners for the City of Detroit, Water and Sewerage Department authorizes the Director to execute a resolution pertaining to securing low interest loan assistance through the Drinking Water Revolving Fund (DWRF) for Water Main Replacement as detailed in the FY19 DWRF Project Plan, and also authorizes the Director to take such actions as may be necessary to accomplish the intent of this vote.
JUSTIFICATION
The Water Main Replacement is necessary to ensure that the Detroit Water and Sewerage Department (DWSD) will consistently and reliably provide high quality potable water to its customers in the City of Detroit. DWSD is seeking a low interest loan assistance through the DWRF program. Although the MDEQ interest rate for FY 2019 will not be determined until October 2018, the current year’s interest rate of 2.0% is less than the present conventional bond rate. Based on the estimated project amount, DWSD could save an estimated $9 million interest costs and avoided issuance costs, based on a similar market revenue bond with a 30-year term and 5.0% interest rate. This will afford savings to DWSD and its customers.
The Water Main Replacement Project is comprised of replacing 42,000 feet (approximately 8.0 miles) of aged water mains ranging in size from 8 to 16 inches with new water mains. These water mains are located throughout the City of Detroit.
BACKGROUND
Attached for your review is a copy of the FY19 DWRF Project Plan for the Water Main Replacement and resolution in support of the Project Plan. The Public Hearing on the FY19 Water Main Replacement Plan was held on April 4, 2018 at 1:00 P.M. Upon approval of the resolution, the Water Main Replacement Project Plan will be assembled, printed, and submitted to the MDEQ by May 1, 2018.
PROJECT OBJECTIVE/COST
GLWA will be the loan applicant on the DWRF loans issued on behalf of DWSD, and
DWSD will be the DWRF loan recipient as determined by MDEQ. All project costs financed by GLWA, on behalf of DWSD, through the DWRF program bonds and resulting principal and interest payments on the bonds will be directly allocable to the DWSD local system. Debt service is anticipated to begin in FY 2020 for this project and will be included as part of the FY 2020 financial plan.
The overall capital cost of the Project Plan through the DWRF Program is estimated to be $16,000,000.00 with repayment of the DWRF loan, payable to GLWA, over a 30-year period.